Correlation Between ScanSource and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both ScanSource and Weibo Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ScanSource and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Weibo Corp, you can compare the effects of market volatilities on ScanSource and Weibo Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ScanSource with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Weibo Corp.
Diversification Opportunities for ScanSource and Weibo Corp
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between ScanSource and Weibo is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and ScanSource is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ScanSource are associated (or correlated) with Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of ScanSource i.e., ScanSource and Weibo Corp go up and down completely randomly.
Pair Corralation between ScanSource and Weibo Corp
Given the investment horizon of 90 days ScanSource is expected to generate 1.1 times more return on investment than Weibo Corp. However, ScanSource is 1.1 times more volatile than Weibo Corp. It trades about 0.2 of its potential returns per unit of risk. Weibo Corp is currently generating about -0.07 per unit of risk. If you would invest 4,545 in ScanSource on August 29, 2024 and sell it today you would earn a total of 642.00 from holding ScanSource or generate 14.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Weibo Corp
Performance |
| Timeline |
| ScanSource |
| Weibo Corp |
ScanSource and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Weibo Corp
The main advantage of trading using opposite ScanSource and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Weibo Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Weibo Corp will offset losses from the drop in Weibo Corp's long position.| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
| Weibo Corp vs. Alphabet Inc Class C | Weibo Corp vs. Twilio Inc | Weibo Corp vs. Snap Inc | Weibo Corp vs. Baidu Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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